Common HR Mistakes Start-Ups Make

Make no mistake - your biggest assets are not your products, processes or even your patents. The most valuable asset any company has is the staff. And a happy team usually means a successful business because satisfied employees are loyal and driven.

Despite this basic truth, most entrepreneurs focus mainly on business, clients and developing ideas while glossing over man-management. Let's take a look at some of the common mistakes start-ups make.

1. Appreciate your employees - and let them know it!

Remember when you slaved for someone else? Remember how you longed for a word of appreciation, a little positive feedback, a little encouragement, every now and then? Often, the problem with start-ups is that the founders get so caught up in the business and operations that they neglect their employees.

According to Manohar and Sashi, who run a food business, "In the first year of business, we were so busy making sure we were meeting investors and setting up our office that we neglected our first few employees. As a result, they were snapped up by competitors within months. It was a lesson we learnt the hard way - focus on people as much as on the business. The couple spent hours interviewing people just to find replacements who suited their requirements, matched their ideas and were passionate about their work. "If you don’t walk with them on the journey, encourage them to come up with ideas and participate in decisions, you will eventually lose them," points out Anandhi, who runs a recruitment business.

2. Define tasks for your staff

Finding an angel investor or office space is only one aspect of a successful business. What about the people who will be working alongside you and the rest of the staff who are delivering services and products? "When I started Effectworks, it was just me. But as time went by, I recruited a team, a small one but one that helped drive the business. I had to keep them engaged and ensure each one was focused and driven. I assigned roles and tasks based on their abilities and comfort levels. I also took them with me to events and introduced them to the people who were on the other side of the fence," shares S S Narayanan, a sanitary ware entrepreneur. Unfortunately, Narayanan is an exception and most companies fail to keep their employees focused. Employees are not assigned specific tasks and everybody is working on everything, which will ultimately lead to chaos.

Raj, who has an art direction business, explains, "When the team is young and full of energy, people are eager to please and the owners of the company let them run amok. It’s like a flock of sheep with no shepherd. On some movie sets, I have watched people run around aimlessly. This leads to confusion, failure to complete activities and tasks, leading to undue delays and expense." Another fallout: your employees will shop for other jobs.

3. Invite your team to participate

The only way a person will grow is by learning, and this happens by asking questions and being allowed to participate in various activities. Most start-ups work with blinkers on and are so caught up in the business of seeking customers and clients that they neglect the people working behind the scenes. They hold meetings only with the top management and do not involve people down the ladder. They do not invite inputs from team members. Lack of team participation is a classic mistake made by start-ups. Ankita, who runs a digital media agency, explains, "When I started my company, my sole aim was to keep the business going and grab new clients. In the process, I lost out on a lot of learning, especially in terms of people. I used to think it only my thoughts mattered. I have since realised that other people have valuable inputs, they bring a new dimension and perspective that always add value."

4. Everyone’s in it for the money

The classic line every entrepreneur gives new recruits is, "We are a start-up, we’re looking for people who are driven and passionate." Nothing wrong with that. It’s the sub-text that's the problem and it goes something like this, "Since passion is its own reward, factor it into your package!"What many entrepreneurs don’t understand is that people come with expectations, which include due monetary compensation. During the HR interview, the HR department works hard to convince candidates to accept the offer even though it pays less than what they were earning or less than the market rate. They trot out trite lines about ‘learning’ and ‘exposure’ and 'getting the opportunity to grow'.

People need to feel they are valued, and in most cases, money talks. If you pay less than the market rate, the candidate will accept the job but will keep looking for better options.

Sangeetha, head of HR & Admin with a finance solutions company says "It is our duty to convince people to take the position they are being interviewed for and get them to accept the offer. We understand that the company cannot pay as much as others do, so we try to provide additional bonus or cover certain expenses till we get to a stronger position. But the attrition is fairly high, quite worrying in fact."

By definition, every entrepreneur is a debutant to the world of business. But no excuse is good enough for bad 'human resource development'. So if you’re guilty of any of the above, it’s never too late to mend your ways.